We went out on a limb last March and predicted daily fantasy sports would make a comeback.
We based this on three observations:
- DraftKings and FanDuel making in-roads in the U.K.
- DFS Legalization in both Virginia and New York (and many others considering)
- States realizing it is a new revenue stream
The emergence of DraftKings and FanDuel spearheaded the DFS explosion. Both companies were very profitable until legislators ruled it as a form of gambling contrary to DraftKings’ and FanDuel’s claim it was skill (Call it what it is – it’s gambling).
The above states and a few others, however, have discovered the revenue potential DFS brings, and have ‘modified’ their anti-gambling laws (read: it’s not gambling, it’s skill) to make DFS legal. We think more states – not all of them – are going to follow, and the industry will once again find stability.
The Latest Evidence: New York State
In November 2015, New York State Attorney General Eric Schneiderman said daily fantasy sports violated the state’s anti-gambling laws. Last Wednesday, New York State Governor Andrew Cuomo bypassed AG Schneiderman and signed into law the daily fantasy sports bill with the help of the state legislature.
In a New York Times article, Gov. Cuomo said, “This legislation strikes the right balance that allows this activity to continue with oversight from state regulators, new consumer protections and more funding for education.” State Assemblyman J. Gary Petlow added, “Fantasy sports are more than online games — they have the potential to generate millions of dollars in revenue for New York State.”
New York’s DFS bill comes with consumer caveats:
- DFS websites cannot allow anyone under age 18 to play
- Advertisements cannot mislead consumers about chances of winning
- Websites must allow a consumer to quit at anytime and provide resources for compulsive gamblers (But wait…the Governor said it wasn’t gambling). Might we see spending limits in the future?
- Websites must identify ‘highly experienced’ players
- Websites must keep consumers’ funds separate from operational funds
- Websites are prohibited from offering resources for wagering college sports
Daily Fantasy Sports Payment Solutions are Difficult to Come By
Daily Fantasy Sports is a high risk industry, for which credit card processing is difficult to find. At Instabill, our international banking partners will accept applications from DFS merchants with the following criteria:
- $100,000 processing per month
- Six months of processing history
- DFS business must be registered in a country outside the U.S.
Indeed, it is a difficult criteria to follow. We believe, however, that DFS is a fast-emerging industry which banks will embrace in the near future.
What are your thoughts on the legalization of DFS? Is it gambling or skill? Please leave a comment below.